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| An e‐commerce company sells hotel room nights on its website under agreement from a large number of major hotel chains. The hotel chains grant the company flexibility for the rooms they supply to the company’s website and for the prices charged. These major chains bear the responsibility for providing all services once a customer books a room from the website. During 2011, the company received $5 million in payments from the sale of hotel rooms. The cost of these rooms was $4.5 million, which does not include $250,000 in direct selling costs. Under U.S. GAAP, the company’s cost of sales is closest to: A:$250,000. B:$4,500,000. C:$4,750,000. |
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